Would It Be Possible To Have Silver Circulation Coins Today?

Yes it would be possible to have a 40% silver quarter or half dollar but my guess is it won't happen. If the size was reduced and the value of the silver in the coins was low enough so as to discourage hoarding, then that would also improve the likelihood of the coins circulating. My thinking goes along the lines of the new Canadian $50 silver coin. While not intended for circulation, the government profits in a big way because they carry the full fifty dollar value 'on the books' with a very low cost.

 

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Sure.

Today silver is around $16 an oz so use a base of $50 an oz (so the value of silver would have to more than triple before the metal was worth more than the face value.) and you get .8 grams of silver to be in the new 40% silver half dollar. That would give you a finished weight for the new 40% silver half of roughly 2 grams or about the size of a current dime. A 40% silver quarter would be the size of a half dime, and a 40% dime would be a little smaller than the old 3 cent silver piece.

Of course due to the sizes they wouldn't be that practical, but it could be done. you could make them larger if you were to reduce the fineness below 40%.

Hoarding of the 40% silver coins would be unlikely because the face value of the coins would be much higher than the metal value.

 

The relative strength of "the economy" is not based on the composition of the currency. Since early history, precious metals in currency provided confidence in transactions due to the intrinsic value of the metals. That fundamental is no longer in play since paper money and electronic funding have gained world wide acceptance. As others have already stated...any currency made of PM's would be pulled from circulation, unless denominations are hiked to the point where we would not feel comfortable carrying them on our person.

 

I believe Mexico is the last country to try and circulate a coin with silver content, when the peso was redenominated upward in 1993. Given Mexico's long coinage history of precious metal coinage, the effort was noble but another classic application of Gresham's Law. The coin was hoarded and did not last long in circulation without reverting to a base metal bi-metallic.

In just two-to-three generations, all precious metal has been driven from all the world's coinage systems. I doubt it will return in my lifetime (I am age 54).

The value of the US dollar in 2015, 102 years after the creation of the Federal Reserve System of Banks has fallen to the 1913 value of one cent. It was once illustrated that buying a home in the early years of the 20th century took a specific number of ounces of gold. In 2015, the home costs exactly the same in terms of gold, but the dollar amount is vastly inflated in comparison.

 

The Article below was written in July 2009

"The dollar bears are having a field day with the fall of the dollar. I'm also a dollar bear, having written articles with such titles as: The Dollar Is Doomed and Will The U.S. Dollar Crash?


It Ain't Easy Being a Dollar Bear
Over the past century (1900-2000), the dollar has kept its value far better than fourteen of the fifteen hard currencies of the world......"

http://seekingalpha.com/article/146660-why-you-shouldnt-speculate-on-the-dollar


When people write about the loss of value of the dollar, they tend to leave the opinion that all other currencies have done better. Far from it. Yes, you may want metal back in the currency , and most say it is to strengthen the USD, but more likely people want it so it can be plundered out of circulation. if the article above ( in a PM favored publication) had been followed , there was great wealth to be gained, but you would have to bet on the USD, and only the financially astute did so, include the hated 'banksters'.

During the 100 years, the Swiss Franc did better than the USD, but they had to loosen the peg to it, and there was a referendum a few years ago and the Swiss voted against putting PM backing to their currency. I believe if there was such a referendum in the US, the vote would be the same, whether stackers liked it or not.

 

I'd like to say thanks for all the well written and thought out posts to this.

 

The dollar has been an abysmal failure, over the last 100 years it has lost about 98% of its value. Its irrelevant to me whether other currencies have done worse.

 

The first problem would be - What size should it be? The furor of having a dollar coin so close in size to the quarter created a public storm. So, the circulating precious metal coin has to be a radically different size. Small doesn't work so well since that makes them easy to lose, so it has to be large. Simple, make the Silver American Eagle a $50 and that might work except for the fact that no one wants to carry something that large around.

 

For a U.S. Quarter to be worth exactly silver value (give or take a couple fractions of a cent) it would need to be around 8% silver. The mint would most likely play it safe due to price changes and hoarding and do the coins of 4% silver. A quarter made of 4% silver would have a melt value of 12 cents, that is the equivalent of half the amount of copper that is in a 90% silver coin. I think it would be a bad idea that would not get used for many reasons. Reason one, I do not think the mint would think it would be worth doing coins with just a tiny percent of silver, it would probably not be worthwhile for just a tiny bit of silver. Reason two, Silver coins would probably be extensively hoarded due to metal and create a coin shortage. People would keep the coins due to the silver content in hopes the face value will exceed the silver value. Reason three, silver is very volatile. In the past five years silver has changed it's value extensively. Who's to say that if coins are made of silver the melt value will soon be way above the face value. Anyways, In my opinion putting silver in circulating coins would be a bad idea.